Microsoft's cloud ERP plans get mixed reactions

Chris Kanaracus, IDG News Services |
April 12, 2011

Microsoft's announcement this week that it would begin offering its Dynamics ERP (enterprise resource planning) software via the Azure cloud platform drew significant interest from attendees of the Convergence conference in Atlanta, but some users and partners have questions Microsoft has yet to answer about its plans.

Microsoft may have some success convincing customers with smaller IT shops to move to Azure, said Frank Vukovits, director of programming for the Dynamics AX User Group.

A single IT staffer may be pulling double, triple, even quadruple duties as a database administrator, network technician and Exchange server supporter, he said. If the ERP system was moved to Azure, that could free up time for projects that create new benefits, instead of keeping the lights on.

But for companies with larger IT staffs, such a move may be less attractive. "It's a little tougher to say we'll move ERP but keep everything else in-house," he said.

However, Dynamics customers who are already using a hosting service would do well to give Azure some consideration, according to Vukovits. "Most people don't know Microsoft has been in the hosting business for a long, long time," he said. "If I was a CIO I would probably be comfortable hooking up with Microsoft."

Argo Turboserve Corp., a user of both Dynamics AX and CRM, has some interest in moving to the cloud but will likely do a phased approach, said CIO Art Johnston, who is also chairman of the Dynamics CRM User Group's advisory board.

But Johnston is not satisfied with the level of detail Microsoft has provided so far about its plans, particularly about how such a deployment will integrate and co-exist with other systems at Argo, a supply chain management and nuclear engineering services company based in Edison, New Jersey.

Microsoft will tackle cloud integration with technologies like Azure Service Bus, according to Kirill Tatarinov, corporate vice president and head of Microsoft Business Solutions. "Interoperability has been a huge priority for Microsoft as a whole and Dynamics," he said.

Johnston also has mixed emotions about subscription pricing, which helps customers avoid large up-front costs, but in the long run may end up costing more.

Meanwhile, Dynamics ERP has historically been sold and delivered strictly through Microsoft's vast partner channel, whether in on-premises or hosted form. Partners have therefore been the primary "face" for Dynamics customers, not Microsoft itself. They also depend on ongoing revenue from services engagements.

"We expected it," said one employee with a hosting company based in California, who requested anonymity. "Their message for the last year or so has been all in [for the cloud]. You can't have 'all in' without ERP," he said.

Microsoft hasn't given partners like his company much information so far, he said. "They said they were going to bring the partners into the cloud. We're not sure how."